Schwieterman: Firm US dollar dampens commodities

Corn                                              Estimated Fund Position
Trends
Short Term:Down                      Net Long Futures and Options: 33619
Long Term: Down                      Change: -3000
Overnight Trade: N Unch Z -1 @7:15 AM
Opening Calls: Mixed

The corn was quiet overnight. The market is oversold and due for a bounce, but trying to pick a bottom, particularly in the old crop, has been futile. New crop futures have been trading sideways for 5 sessions and that looks to continue. The weather in the Corn Belt is not conducive to achieving USDA’s 166 bu/ac yield estimate, which is supporting the December contract and encouraging bear spreading.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -44207
Long Term:Up                              Change: -2000
Overnight Trade: Chicago: N -3 1/4 KC: N -3 3/4 @7:15 AM
Opening Calls: 2-4 Lower

The July KW made a nice recovery yesterday, but had no follow through buying overnight. A positive close today would indicate the correction is over and that a retest of the highs is in order. However, I am still concerned about a potential move down to the $6.55 level. It is harvest time after all and their simply hasn’t been any buying enthusiasm in the markets. If you want to be a buyer, be patient.

Soybeans                                       Estimated Fund Position
Trends
Short Term: Down                       Net Long Futures and Options: 175476
Long Term: Down                        Change: -4000
Overnight Trade: N -5 X -6 1/2 @7:15 AM
Opening Calls: 5-7 Lower

The soybeans continue to trade in a sideways/lower pattern and so far there is little reason to expect that to change today. The weather looks supportive, but the outside markets and the world economy are acting like a dark cloud over all the markets. The funds still have a large net long position that could be liquidated, which is also a major concern.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Mixed

Live cattle futures closed sharply lower on Wednesday, as macro influences outweighed improving demand fundamentals. The struggling Euro union continues to firm the US Dollar, dampening bullish enthusiasm in commodities in general. This weeks’ employment numbers, which start this morning and finish Friday morning, will likely be a lasting influence on currency movement. Cash trade could start to take shape today if basis levels are good enough for hedgers.

Feeder Cattle
Trends
Short Term: Down
Long Term: Up
Opening Call: Mixed

Feeder cattle futures finished with triple digit losses on Wednesday, as poor closeouts and drying grass lands weighed on the market. For the week August feeders are off 2.50 in spite of continued struggles in the corn futures. We have seen good strength in the cash feeder market so far this week, which has narrowed the spread between cash and futures significantly. Corn, like feeders, is narrowly mixed in early morning trade.

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